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Poland Spring feels the heat in Augusta: Hearings focus on water tax, corporate rights

By Ann S. Kim, Portland (ME) Press Herald, May 5, 2009

Poland Spring is fighting a number of measures as lawmakers consider proposals ranging from a tax on bottled water to a bill that would allow local communities to deny corporations their constitutional rights. The proposals come as the water bottler has also had to contend with the recession, growing public distaste toward plastic bottles and opposition to its activities in a number of Maine communities.

Portland Press Herald website special features related to this article.

Today, the Taxation Committee holds a public hearing on a proposed penny-a-gallon tax. The tax would apply to containers of five gallons or less, with half the revenue offsetting other taxes; 25 percent to watershed and water-quality protection; and 25 percent to the community from which the water was extracted.

The tax is the most problematic of the proposals before the Legislature, said Mark Dubois, natural resource manager for Poland Spring. He said the tax would cost the company $7 million annually, or 20 percent of its annual payroll.

“It simply puts Maine jobs at risk,” Dubois said.

Poland Spring, a subsidiary of Nestle Waters North America, is the third-leading brand of bottled water in the country, behind PepsiCo’s Aquafina and Coca-Cola’s Dasani. The company employs 800 people in Maine.

The bill’s sponsor, Rep. Jon Hinck, said the tax is “absolutely not” meant as a disincentive to bottle water in Maine. He said he did not want to revisit an earlier 20-cent tax because he thought it was too high.

“We don’t want to hurt the golden goose. We don’t want to hurt the company competitively,” said Hinck, D-Portland.

He said raising revenue from a natural resource base was a good alternative to reliance on sales and income taxes.

Steve Clarkin, a consultant to the Maine State Chamber, said the tax would have implications beyond Poland Spring. A few smaller water bottlers would be affected, as well as scores of suppliers and vendors who do business with the companies, he said.

He also criticized the rationale for the tax, saying that other renewable resources, such as trees or surface water used by microbreweries, are not taxed.

“Why single out this sort of natural resource extraction for unique treatment? It just doesn’t make sense,” Clarkin said.

The Natural Resources Committee holds hearings today on other bills related to groundwater extraction. They include a proposal to create a panel to study groundwater extraction’s implications, and two bills giving groundwater the same status as surface water, which is considered part of the public trust.

On Wednesday, the State and Local Government Committee considers a bill that would allow municipalities to deny corporations constitutional rights. Discussion among committee members and a vote are possible during the work session.

The measure is related to local water-extraction ordinances promoted by activists in several communities. The local ordinances state that corporations doing business in the community do not have the protections found in the federal and state constitutions.

Residents of Newfield and Shapleigh have approved such measures in recent months. Selectmen in Wells had voted against putting the measure on the ballot, but a petition drive gathered enough signatures to force a special town meeting that will be held May 16.

“We’re trying to protect our own aquifer here in southern Maine because we don’t want to get in bed with Nestle. And we want the right as local people to protect our local resources,” said Cynthia Howard, a Biddeford architect and a member of Save Our Water, or SOH2O.

SOH2O opposed a proposed 30-year contract between Poland Spring and the Kennebunk, Kennebunkport and Wells Water District. The company would have been able to draw up to 250,000 gallons daily from Branch Brook in Wells. By way of comparison, the district uses about 7 million gallons a day during peak periods. District trustees tabled the plan last summer.

Former Rep. Rick Burns, D-Berwick, who drafted the corporation bill, said the measure was inspired only in part by residents worried about a multinational corporation seeking water in their community. The larger issue, he said, is that corporations have gained protections meant for actual people.

“This is a bill that welcomes any business that wants to come into any municipality in the state of Maine,” he said. “It lays out the groundwork that the first order of business is respect for the community you come into.”

The state Attorney General’s Office believes the bill to be unconstitutional, said Kate Simmons, an office spokeswoman.

Chris Jackson, a lobbyist for the Maine State Chamber, characterized the bill as one of the most anti-business pieces of legislation he’s seen at the State House in some time.

“Even if the bill doesn’t pass, it still sends the wrong message to the business community when they see it show up,” he said. “It also sends the wrong message to businesses outside of Maine that may be thinking of coming to Maine at some point.”

CORRECTION published Wednesday, May 6, 2009:

A story on Tuesday should have made clear that a proposed contract between the Kennebunk, Kennebunkport and Wells Water District and Poland Spring would have limited water withdrawals by the company to 432,000 gallons a day but that the water district expected actual withdrawals to be closer to 250,000 to 300,000 gallons a day.

Staff Writer Ann S. Kim can be contacted at 791-6383 or at: akim@pressherald.com

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